BHP could sell BMC in bid to decarbonize, iron ore shines in 2019-20 fiscal performance

  • Wednesday, August 19, 2020

  • Keywords:BHP, BMC
[Fellow]BHP could sell BMC in bid to decarbonize, iron ore shines in 2019-20 fiscal performance

[]BHP is mulling the sale of its 80% owned BHP Mitsui Coal, or BMC, coking coal operation in Queensland, along with two thermal coal mines, in a bid to decarbonize its portfolio of commodities, the company said on Aug.18.

BHP's share of production at BMC in the fiscal year ending June 30 was 9.54 million mt. Japan's Mitsui & Co owns 20% of BMC which is comprised of the South Walker Creek and Poitrel mines in central Queensland.

The company said in its fiscal 2020 results announcement that BMC produced lower quality met coal and it would "pursue our options to divest in our interests" in the operation. Two thermal coal assets, New South Wales Energy Coal, and Cerrejon in Colombia, are also potentially up for sale.

BHP remains committed to the far larger BHP Mitsubishi Alliance, or BMA, coking coal mine in Queensland as it recognized met coal as an "essential input into the steelmaking process for a long time yet."

High quality hard coking coal, such as that produced at BMA, would become even more in demand as steelmakers tried to reduce their carbon emissions.

Including the share of its joint venture partners, BHP produced a total of 72.7 million mt of met coal from its Queensland Coal operations (BMA and BMC) in the year to end June 2020, down on 74.5 million mt a year earlier.

BHP cited the S&P Global Platts premium low-vol HCC price as coming under "downward pressure" in the April-June quarter due to COVID-19 related lockdowns in Europe, India, Japan and South Korea. It said demand from China had been "firm", but noted China's coal import policy remained a "key uncertainty."

A results presentation showed that iron ore comprised 64% of BHP's overall earnings in fiscal 2020, up significantly from 48% a year ago. Met coal accounted for just 9% of the miner's earnings, compared with 17% a year earlier. (The coal contribution included thermal coal in fiscal 2019, Platts noted.)

BHP said its new South Flank iron ore mine, which will replace Yandi product, was on track to start producing within the next 12 months.

In fiscal 2020, iron ore earnings before interest, taxes, depreciation, and amortization, or EBITDA, were $14.6 billion, up from $11.1 billion a year earlier, while met coal EBITDA in the year ended in June was $1.9 billion compared with $4.1 billion (including thermal) the year before.

BHP's total underlying EBITDA for the financial year was $22.07 billion, down 5% on the year before.

(S&P Global Platts)

  • [Editor:王可]

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